Home insurance vs home business insurance

Whether it’s a side hustle or your main source of income, starting a home-based business is no mean feat. Chances are, you invested plenty of time, effort and money to build something from the ground up.  Here, we outline what kind of insurance you can consider to help protect your empire.

Careful planning can help you prepare, but can’t account for every risk. The right policy can help protect you by offsetting some of the financial burden should your business fall victim to malicious activity or an unforeseen natural disaster, helping you bounce back just that little bit faster.

So which option is more suitable for your home-based business? Let’s break it down.

A home contents insurance policy can provide a very limited level of cover if you run a business, trade or profession from your home. This can include cover for:

• Home office equipment: such as your desk, chair, computer and other electronic items that you use for office work.
• Tools of trade:  limited cover for the tools you use to do your job, but store at home.

What won’t be covered by a home policy, is any stock you keep for your business. For example, if you sell custom printed t-shirts and keep the stock at home, the t-shirts wouldn’t be covered by a home insurance policy if they’re damaged, destroyed or stolen. Or, if you have a business selling jams or preserves, and a customer gets food poisoning from your product, you wouldn’t be covered by home insurance for any resulting liability.

Likewise, any business activities you conduct from home won’t be covered. For example, if you provide personal training from your garage and your client gets hurt, your home insurance policy won’t cover that kind of business liability.

A home contents insurance policy can provide a very limited level of cover if you run a business, trade or profession from your home. This can include cover for:

• Home office equipment: such as your desk, chair, computer and other electronic items that you use for office work.
• Tools of trade:  limited cover for the tools you use to do your job, but store at home.

What won’t be covered by a home policy, is any stock you keep for your business. For example, if you sell custom printed t-shirts and keep the stock at home, the t-shirts wouldn’t be covered by a home insurance policy if they’re damaged, destroyed or stolen. Or, if you have a business selling jams or preserves, and a customer gets food poisoning from your product, you wouldn’t be covered by home insurance for any resulting liability.

Likewise, any business activities you conduct from home won’t be covered. For example, if you provide personal training from your garage and your client gets hurt, your home insurance policy won’t cover that kind of business liability.

For home insurance customers, concerns typically include:

• not having cover for public liability
• cover for stock and equipment used for business is limited and excluded from certain cover types
• no cover for business interruption.

This is why it’s important to consider the type of business you’re running, the risks associated with your business and the potential impacts on your business and livelihood if you don’t have the right cover.

Business insurance is available to help you manage the cost of the many risks associated with running a business from home, including protection for your earnings, equipment and stock.

With a business insurance policy, you can mix and match different types of cover to create the policy that best suits your business. Here are some of the types of cover home-based business owners might consider:

• Public liability insurance: for protection against claims for injuries or property damage caused by a business’s negligence. For example, if you provide personal training in your garage, and a client trips over equipment you failed to put away and hurts themself.
• Professional indemnity insurance: to help cover the cost of certain legal disputes, claims or costs arising from mistaken or omitted advice or services provided by your business.
• Tax investigation cover: to help cover the cost of professional fees resulting from an audit or investigation which relates to your business paying a tax.
• Property: to help cover the cost necessary to replace or repair stock if materials, supplies or merchandise are damaged, destroyed or stolen as a result of a policy-listed event.

Short answer: yes!

If you’re insured with NRMA Insurance, it’s required that you let us know how your property is being used and what kind of business you’re running. Failure to do so can result in a refusal or reduction of a claim, policy cancellation, or both.

We’ve covered a lot. Here’s the crux of it:

• A home insurance policy won’t cover your business activities, stock or public liability if a customer or supplier injured themselves while visiting your home.
• A business insurance policy can cover your business activities, with different types of cover available to help safeguard your financial interests in the event of damage occurring to your equipment, stock or operations.
• If you run a business from home, it’s important to let your insurer know.